Suss Microtec upgraded to “buy” by Jefferies, UBS on AI-driven recovery prospects

Investing.com -- Semiconductor equipment maker Suss Microtec has received twin upgrades from Jefferies and UBS Global Research, both raising their recommendations to “buy” on expectations that demand from artificial intelligence (AI) chip production will sustain orders into 2026. 

Shares of the Garching-headquartered company were up 9.1% at 06:25 ET (11:25 GMT). 

The analysts said current weakness in orders and margins is already priced into the stock, which trades at a steep discount to global peers.

Jefferies raised its price target to €42 from €31, saying that “the weakness in 2025 orders and backlog is fully reflected” in current consensus estimates. 

UBS lifted its target to €39 from €30, citing “an improving AI demand outlook” and a better outlook for high-bandwidth memory (HBM) and CoWoS tools.

Both brokerages see Suss as undervalued, with Jefferies noting it trades at 14x FY26 earnings, a 56% discount to peers, and UBS highlighting its 15x P/E versus a 10-year average of 17x and peer average of 30x.

Jefferies expects Suss’ order intake to “rise 71% quarter-on-quarter to €120 million in Q4-25,” marking a recovery from a low point in the third quarter. 

The rebound is expected to come from photomask cleaning orders from Samsung, Micron, TSMC and SK Hynix, along with UV scanner demand from TSMC and temporary bonder orders linked to HBM production. 

Jefferies said, “We expect coater orders to stay at a healthy level from Korean and Taiwanese OSATs.”

UBS, meanwhile, sees 2026 as “broadly de-risked,” expecting sales to fall just 5% year on year versus its earlier forecast of a 22% decline and 15% drop projected by consensus.

The brokerage forecasts an EBIT margin of 14% in 2026 and 15% in 2027 as cost measures and the ramp-up of Suss’ new Zhubei, Taiwan site are completed. 

“We expect a slight improvement in EBIT margin next year (UBSe 14%) driven by completion of the new Zhubei site, improving product mix and efforts to reduce the cost base,” UBS said.

Both analysts identified AI-related demand as the main catalyst for recovery. UBS said, “We now forecast DRAM capex +35%/7% yoy in FY’26/27 driven by HBM capacity builds across all three players.” 

It also expects Advanced Back-End Solutions (ABS) sales to grow 4% in FY26 and 7% in FY27 as temporary bonder demand rises from a low base. UBS noted that HBM “could return to historical exposure (>20% of revenues)” after digestion in 2025.

Jefferies and UBS both pointed to the company’s upcoming Capital Markets Day on November 17 as a potential near-term catalyst. 

Suss is expected to outline five new tools, including a high-NA photomask cleaner co-developed with TSMC and a next-generation UV scanner for advanced packaging. Jefferies said these new products “should drive sales and margin upside from 2027.”

Both firms view the company’s exposure to AI manufacturing as underappreciated. UBS said, “Given Suss has significant AI exposure, we see an argument for multiple expansion.” 

Jefferies added that the stock is “perhaps one of the lowest valuation multiples that we can get on a semicap equipment stock today globally.”